The post DeFi Credit Markets Stabilize After Months of Decline appeared on BitcoinEthereumNews.com.

Blockchain On-chain lending is quietly regaining momentum at the start of the year, hinting that crypto-native capital is returning after months of caution. After stagnating in the wake of last autumn’s market shock, lending activity has begun to climb again, led by a small group of dominant protocols and fueled by renewed interest from large holders seeking yield and liquidity. Key takeaways: DeFi lending has resumed growth after months of decline following the October liquidation event. Aave and Morpho are driving most of the recent expansion in on-chain loans. Ethereum remains the core lending hub, far ahead of other chains. Rising lending activity may signal improving sentiment toward ETH and DeFi more broadly. The recovery follows a prolonged slowdown that set in after the October 2025 crash, when a sharp liquidation event froze risk appetite across DeFi. While lending protocols avoided the worst of the forced liquidations — thanks to relatively conservative collateral thresholds — sentiment remained too weak for meaningful expansion. That dynamic has begun to change in recent weeks. Lending activity rebuilds after the October drawdown Data from Token Terminal show that total ecosystem lending has risen steadily over the past three weeks, marking the strongest rebound since the October shock. By early 2026, active on-chain loans reached roughly $36.6 billion, up about $2.1 billion from December. While still below peak levels, this represents the clearest sign yet that lending demand is returning. Two protocols account for the bulk of that growth. Aave added around $1.1 billion in active loans over the past month, while Morpho expanded by roughly $450 million. Aave’s scale and deep liquidity continue to attract borrowers, while Morpho’s curated lending model has drawn users seeking more tailored risk and return profiles. Aave’s longer-term trajectory stands out. Over the past two years, its share of…

---

Filed under: News - @ January 12, 2026 2:26 pm